Debt collection and disputing debts

Dealing with debt collectors

A ‘debt collector’ is a person who collects debts in the course of a business. This could be:

• a creditor collecting a debt themselves (this includes ‘assignees’— people or businesses who have been sold or ‘assigned’ a debt by the original creditor)
• someone acting on behalf of the creditor (e.g. an independent collection agency).

If a debt collector contacts you, be cooperative. In turn, you should expect to be treated in a professional manner.

Debt collectors must act within the law when recovering debts. This means they must obey laws that are designed to protect you from misconduct. Under these laws, a debt collector must not:

• use physical force or coercion (forcing or compelling you to do something)
• harass or hassle you to an unreasonable extent
• mislead or deceive you (or try to do so)
• take unfair advantage of any vulnerability, disability or other similar circumstance affecting you (this is known as ‘unconscionable conduct’).

These laws also apply to a debt collector’s conduct towards your spouse, partner, family member or other person connected with you.

Disputing a debt

If you are contacted about a debt you do not owe (or if you disagree with the amount of the debt being claimed), you have a right to dispute the debt or the amount of the debt.

If you are disputing a debt, a debt collector should stop collection activity until any reasonable request for information has been met, and the debt has been confirmed. Also, a default listing on your credit report should not be made during this period.

‘I thought that debt had been paid!’

Sometimes a debt collector might contact you about a debt even though you have paid it in full, or it has already been settled in some other way. Contact the collector, preferably in writing, and advise them that the debt has already been paid. Make sure you provide copies of any records or information which proves you have paid the debt. You should also ask the debt collector why they are contacting you. If the collection activity continues without an adequate explanation, make a complaint.

‘I don’t think I owe that much!’

You might accept that you owe the debt but disagree with (or are unsure about) the amount claimed. If this is the case, ask for an itemised statement of your account that clearly sets out:

• the amount and date of the alleged debt
• how it is calculated
• details of all payments made and all amounts owing (including principal, interest, fees and charges).

'That is not my debt!'

If you are approached about a debt which you know nothing about, it may be a simple case of mistaken identity. Showing your driver's licence or other proof of identity may resolve the situation. However, the decision to show identity is yours—you cannot be forced to do so by a debt collector.

You should also ask for a copy of your credit report to make sure no other fraudulent transactions have been made in your name.